On February 6, 2014, the Ontario Securities Commission (OSC)
issued Staff Notice 51-722, Report on a Review of Mining
Issuers' Management's Discussion and Analysis and
Guidance (the Report). The Report was issued to provide
guidance around a review conducted by the OSC of the annual and
interim Management's Discussion and Analysis (MD&A) filed
by 100 Ontario mining issuers, each with market capitalization
under $100 million. The review was primarily focused on compliance
with various aspects of the MD&A requirements in National
Instrument 51-102, Continuous Disclosure Obligations,
venture issuer disclosure;
discussion of operations;
liquidity and capital resources disclosure;
disclosure of transactions between related parties;
disclosure of risk factors and uncertainties; and
reporting on use of financing proceeds.
In the Report, the OSC recognized that the current market
environment is making it difficult for mining issuers to raise
capital, with smaller mining issuers being particularly affected.
The OSC also acknowledged that such an environment can make
complying with reporting requirements quite challenging for smaller
issuers because of their relative lack of resources. As such, the
Report is intended to assist smaller mining issuers to better
understand certain MD&A reporting requirements and assist the
management of these companies in complying with their disclosure
While the guidance provided in the Report is specific to the
mining issuers reviewed, the content of the Report, including the
specific disclosure examples, will benefit all issuers.
The Report identified the following specific areas for
improvement in MD&A disclosure:
venture issuers without significant revenue from operations did
not provide a breakdown of material components of exploration and
evaluation assets or expenditures;
issuers with exploration projects did not adequately discuss
and itemize their exploration expenditures;
issuers with a working capital deficiency provided very general
discussion or no discussion about potential sources of financing
and how they plan on continuing operations; and
issuers did not appropriately disclose the identity of the
parties involved in related party transactions.
The Report specifically noted that the MD&A reviewed often
contained "boilerplate disclosure" that lacked the
specificity required by securities regulations. The Report includes
several examples of what the OSC views as boilerplate disclosure
and provides helpful guidance as to how such examples can be
revised to include the disclosure required.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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